The Fiat group announced plans on Thursday to raise 1.8 billion euros in fresh capital through a share issue and said it will cut 12,300 jobs as part of its last-ditch rescue plan, according to a Reuters report.
As expected, the news agency said, Fiat chairman Umberto Agnelli told journalists the loss-making company’s board had approved a plan for a 1.8 billion-euro capital increase to help fund the company’s third restructuring plan in two years aimed at returning it to profit.
Fiat will issue 368.5 million new ordinary shares priced at five euros each on a three new shares for every five already held basis, Reuters said.
According to the report, Fiat chief executive Guiseppe Morchio also said Fiat would close 12 factories in 2003-2004, almost all of them outside Italy. He also reportedly said Fiat would cut 12,300 jobs by 2006, the bulk of them also outside Italy. The plan would see break-even for Fiat at an operating level in 2004.
Reuters noted that Morchio’s plan comes a year after Fiat launched a back-to-basics revamp that refocused on the under-invested car unit and sold other assets like an aluminium castings unit, part of its stake in energy group Italenergia and its stake in General Motors.
Reuters also noted that GM owns 20% of Fiat and the Italian firm has an option to sell the rest of the car unit to the Americans next year.